Paradex, a decentralized crypto exchange built as an appchain on the Ethereum Starknet layer two network, will use a centralized rollback to cancel unjustified liquidations that occurred after a software bug fixed the price of Bitcoin at $0.
What happened: a database bug triggers massive liquidations
The malfunction was introduced during routine database maintenance. It caused a display of a zero dollar price for Bitcoin on the perpetual contracts platform, triggering a wave of liquidations on users' positions.
Paradex operates as a perpetual contract platform, where traders hold leveraged positions on futures contracts rather than on the assets themselves.
The platform confirmed that all user funds remain secure.
Trading has been suspended while the team works to restore the platform to its pre-maintenance state.
The platform recorded an average of over 1 billion dollars in daily trading volume over the past month. No timeline has been communicated for the resumption of trading.
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Why it matters: decentralization claims are under fire.
The decision to implement a rollback highlights a tension at the heart of decentralized finance.
Critics have long argued that many platforms presenting themselves as decentralized actually retain centralized control mechanisms. The ability to reverse transactions and restore previous states requires an administrative authority that contradicts the minimal trust principles that DeFi claims.
Similar interventions have already taken place elsewhere in crypto.
Multiple blockchains either rolled back transactions or froze funds following a $120 million hack last year.
Even Ethereum and Bitcoin have experienced such episodes.
Ethereum underwent a hard fork to address the DAO attack in its early days, while Bitcoin nodes rejected transactions related to a value overflow incident in 2010 that created coins out of nothing.
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